In June 2023, Nigeria’s inflation rate continued its upward trend, hitting 22.79%, up by 0.38% from 22.41% recorded in May 2023. In comparison to the inflation rate of 18.60% in June 2022, the headline inflation rate experienced a significant increase of 4.19% on a year-on-year basis.
This is according to the June inflation report released by the National Bureau of Statistics (NBS).
Also Read: Inflation Drops to 17.38% in July; Food Prices to Double Every Five Years
Food and non-alcoholic beverages were the greatest contributors to the inflation rate, followed by housing water, electricity, gas, and other fuels.
Highlights of the Report
On a month-on-month basis, the Headline inflation rate rose by 2.13% in June 2023 compared to May 2023, which had a rate of 1.94%. Thus signifying a 0.19% increase in the general price level on a month-on-month basis. In simpler terms, prices, on average, were 0.19% higher in June 2023 when compared to May 2023.
In June 2023, the food inflation rate was 25.25% compared to the previous year, which was 4.65 percentage points higher than the rate in June 2022 (20.60%). According to the report, the increase in food inflation was due to higher prices of items like Oil and fat, Bread and cereals, Fish, Potatoes, Yam, and other tubers, Fruits, Meat, Vegetables, Milk, Cheese, and Eggs. The food inflation rate rose by 2.40% on a month-on-month basis, which was 0.21% higher than the rate recorded in May 2023 (2.19%).
In June 2023, the Urban inflation rate reached 24.33% on a year-on-year basis, showing an increase of 5.23% compared to the rate of 19.09% recorded in June 2022. On a month-on-month basis, the urban inflation rate experienced an increase of 2.31%, 0.21% higher than the rate recorded in May 2023 (2.09%).
The rural inflation rate reached 21.37% on a year-on-year basis, indicating an increase of 3.25% compared to the rate of 18.13% recorded in June 2022.
Questions have arisen regarding the accuracy of the figures released by the NBS because the organization acknowledged not including the effects of fuel subsidy removal and exchange rate unification in their calculation of inflation numbers. The next Monetary Policy Committee (MPC) meeting is scheduled for July 24. It was anticipated that the NBS would provide precise and reliable data to reflect the current economic situation, enabling the MPC to make well-informed assessments and decisions.
With the next MPC meeting being the first under the current President and the acting CBN Governor, it remains to be seen what decision would be made during the meeting. However, recent actions taken by the Central Bank of Nigeria (CBN) suggest that the bank is leaning towards implementing less restrictive monetary policies. Last week, the CBN issued a circular reducing the Cash Reserve Ratio (CRR) for merchant banks from 32.5% to 10%.
Also Read: Nigeria’s Inflation Continues to Rise, Hits 22.41% in May 2023
During his inauguration, President Bola Tinubu noted that the country’s interest rate was too high, hinting at a reduction of the MPR. However, with inflation at 22.79%, economists have asserted that it is illogical to drop the interest rates.
Saad Jijji, an economist and policy expert said about the interest rate, “I don’t expect a hike with the action taken to relax CRR for some banks. From here, hold seems more likely, a cut seems premature but not too distant.”
